Daily Forex Outlook - Market Plunges, Dollar Soars

By IBT Staff Reporter On 10/28/09 AT 10:05 PM

CURRENCY TRADING SUMMARY - 29th October (00:30GMT)

U.S. Dollar Trading (USD) was second only to the Yen as markets around the world were deep in the red and risk aversion came back into play. September Durable Goods Orders 1.0% vs. -2.6% previously. Hurting sentiment was the large drop in September Home Sales at 402k vs. 440k forecast. In US Stocks, DJIA -119 points closing at 9762, S&P -20 points closing at 1042 and NASDAQ -56 points closing at 2059. Looking ahead, Q3 GDP is forecast at 3.3% vs. -0.7% previously. Also released Weekly jobless claims forecast at 521k vs. 531k previously.

The Euro (EUR)found support in Asia from sovereign buying but as US stocks continued to plunge and EUR/JPY selling intensified through the 135 level the market shunted another leg lower to the 1.4700 figure. German Import Prices were -0.9% vs. -0.6% forecast. Overall the EUR/USD traded with a low of 1.4691 and a high of 1.4841 before closing at 1.4700. Looking ahead, October German Unemployment Forecast at 8.3% vs. 8.2% previously.

The Japanese Yen (JPY)gained across the board as traders took risky trades off the table with the mounting global equity losses. USD/JPY reversed back through 91 Yen and AUD/JPY and NZD/JPY fell over 3% each. After a large run up over the past three weeks the markets were caught long. Overall the USDJPY traded with a low of 90.55 and a high of 91.73 before closing the day around 90.60 in the New York session. Update September Industrial Output Preliminary at 1.4% vs. 1.0% previously.

The Sterling (GBP) was surprising resilient from very heavy EUR/GBP selling through the 0.9000 level. Cable held above 1.6300 and rallied at the start of US through 1.6400 before falling as US stocks slumped. GBP/JPY succumbed to Yen strength but was not as weak as expected. Overall the GBP/USD traded with a low of 1.6286 and a high of 1.6467 before closing the day at 1.6380 in the New York session. Looking ahead, September Mortgage lending data forecast 0.8bn vs. 1.01bn previously.

The Australian Dollar (AUD)was crushed under risk aversion even as CPI data came in stronger than expected. Q3 CPI 1.0% vs. 0.8% forecast. Heavy selling on AUD/JPY came through in Asia and continued throughout the day. Overall the AUD/USD traded with a low of 0.8963 and a high of 0.9207 before closing the US session at 0.8970.

Oil & Gold (XAU) fell in the face of USD strength but safe haven flows stemmed the loss. Overall trading with a low of USD$1026 and high of USD$1042 before ending the New York session at USD$1029 an ounce. Fell heavily on recovery concerns.Crude Oil was down $2.09 ending the New York session at $77.46.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.4674

1.4691

1.4720

1.4927

1.5063

USD/JPY

90.08

90.49

90.70

92.53

93.30

GBP/USD

1.6120

1.6252

1.6380

1.6467

1.6533

AUD/USD

0.8866

0.8963

0.8990

0.9218

0.9329

XAU/USD

1024.00

1026.8

1028.00

1043.00

1067.00

OIL/USD

75.00

76.50

77.30

78.00

80.00

Euro - 1.4720

Initial support at 1.4691 (Oct 28 low) followed by 1.4674 (Oct 9 low). Initial resistance is now located at 1.4927 (Oct 27 high) followed by 1.5063 (Oct 26 high)

Yen - 90.70

Initial support is located at 90.49 (Oct 21 low) followed by 90.08 (Oct 20 low). Initial resistance is now at 92.53 (Sept 21 high) followed by 93.3 (Sept 7 high).

Pound - 1.6380

Initial support at 1.6252 (Oct 26 low) followed by 1.6120 (Oct 8 low). Initial resistance is now at 1.6467 (Oct 28 high) followed by 1.6533 (61.8% retrace 1.7043 - 1.5708).

Australian Dollar - 0.8990

Initial support at 0.8963 (Oct 28 low) followed by the 0.8866 (Oct 7 low). Initial resistance is now at 0.9218 (Oct 27 high) followed by 0.9329 (Oct 21 high).

Gold - 1028

Initial support at 1026.8 (Oct 27 low) followed by 1024 (Sep 17). Initial resistance is now at 1043 (Oct 27 high) followed by 1067 (Oct 20 high).

Oil - 77.30

Initial support at 76.50 (Intraday Support) followed by 75 (major level). Initial resistance is now at 79 ( previous support) followed by 80.00 (Major Level).